Reposting Conversation from FB CHC
Confessions before it gets deleted…
Patricia Lau Patrick, could you clarify how you know about the
JW building being pledged as collateral for the Suntec deal?
Apparently many CHC members still don’t know
about this and it seems that the EMs were not asked to vote on this
matter either. I’d appreciate it if you could provide more details
on this point. Thanks and God bless.
Like · Reply · 1 · August 17 at 1:38pm via mobile
Patrick Liew @Patricia, I am actually surprised at this
question. The pledging of JW church as collateral actually came to
light (in 2010) when a businessman from the church (Mr Simon Teoh),
actually complained to COC about the Suntec
deal and published his letter to the press. In it, he indicated
that the Church should not subject its members to major financial
liabilities without consulting the church’s ordinary members first.
The indication that the JW church was pledged as collateral was
also explained in the lawyer’s letter (Drew and Napier) to the
Church members during the AnB weekend celebration on 2-4 April
2010, which essentially explained the details of the Suntec deal
including the NDA. This was put up in the
CHC website as a PDF
download. I believe this has been taken down since. The whole
matter of the JW church pledged as a collateral is well-known to
the general public, especially those who discuss it in the forums.
The information can also be found here.
http://exchersonesusaurea.blogspot.sg/2012/07/c… Like · 3 ·
August 17 at 3:58pm · Edited
Jean Chong No shadow lah. Not that these leaders didn’t want to
pledge JW, just that no bank want to take it. Reputation risk isn’t
worth it for the bank. A PE loan was taken at
9% to partially fund that initial purchase of 20% for $43.5m.
A&B Fund had raised in excess of $100m at that time but it was
so depleted after repeated raids by CEH/KH
& gangs, hence the need to borrow at such a high interest. It
was pathetic. Like · 2 · Yesterday at 12:28am via mobile
Patrick Liew Yes, during the analysis of the CHC Financial Statement (YTD 2009), in 2010, the church
had basically committed the majority of its funds into various
instruments e.g. (1) $46.3 Million to Licensor just to find a place
for the church, in the form of ‘advance rentals’ (2) Close to $90+
Million in unsecured financial instruments/equities, a large
portion of which were sham bonds in the SOF
(3) Many millions locked in the ‘Miscellaneous Administrative
Expenses’.........overseas speakers honorarium? (4) Huge
expenditures on staff salaries (5) Church planting activities….etc
etc. The cashflow situation was so tight, that many wondered how
they managed the monies to purchase the shares in Suntec Singapore.
At that time, there was some calculations made and the max stake
calculated (based on existing cash) was at most 5-7%. But the
church later announced that the initial stake was 20%. Hence, this
could only be done with a loan from the bank. One wonders how many
other loans the church is servicing in the name of the ‘cultural
mandate’? As a charity, it should not be taking out any loans at
all, since it receives tithes from its members. Was the further
19.2% shares purchase also derived from further loans to the bank?
As it if, there are at least 2 loans known….one (partially) for the
20% share purchase ($43.5 Million) and the other for the
AEI for more than $70 Million. All these will
be borned by the church members, on top of the increasing demand
for AnB. It is a never-ending money pit Like · 2 · Yesterday at
8:11am · Edited
Jean Chong Hi Patrick. The loan for first 20% had been paid up.
The additional acquisition of 19.2% at $54m was financed with A
loan of $50m from A BVI company, Galaxy
Capital. These people are the vendors from the Indonesian
consortium that bought the 80% stake originally. They are related
to Wilmar International and they laughed all the way to the bank
with ROI of 60+. 1) True to form, KH
turned a crisis into opportunity. A block of Wilmar shares was
pledged by shareholders of Galaxy to get the $50m at a cost of
3. Galaxy Capital then loaned to UPI
at 10% with the 39.2% stake as collateral. KH & gang marked it
up with an ANNUAL setup fee of 4-5% during
the 3-year tenure, fleecing CHC $7-8m in the
process. The repayment is $5m plus interest/fee biannually with a
balloon payment of $25m at the end of third year. Balance is still
$40m n KH & gang are trying to refinance it desperately.
Previous effort to refinance balance $40m to 5 years was shot down
as the marked up of annual 4-5% was still included, attempting to
fleeceCHC additional $4-5m. Refinancing effort is still underway
but kept away from Investment Committee which blocked previous
refinancing push. 2) A&B Fund was depleted because KH &
gang used A&B Fund to pay for rental at Expo n the
hyper-inflated shifting n AVI equipment cost.
This freed up $10+m from regular church budget EVERY
YEAR so that they could deploy the freed-up $10+m
YEARLY to “mission” which they don’t have to
give any itemized account. This is no small change considering the
numerous moves since Expo days. The shifting cost during the first
year at Suntec ALONE is $15m!!! broken into a
few portions for masking purposes. Suntec was ideal site for KH
& gang as they could justify at least 5 moves a year due to
MICE needs. They intended to keep the A&B
going as long as possible. 3) The $70.8m liability for AEI loan is not equity accounted as the loan is taken up
by Suntec REIT, probably at HPIL which holds the 80% stake. If you take into the
account of the liability ($70.8m AEI loan,
$40m balance of Galaxy loan plus the exorbitant rates), the value
of $130m+ A&B Fund is left with $10+m in the form of those
hyper-inflated AVI equipment plus the $18m
defaulted SOF loans owed by AMAC Capital. The last A&B campaign took in less than
$10m and the next A&B campaign will be worse, especially after
the 2nd tranche of trail in Aug. The most likely scenario is
CHC will lose a big part of the 39.2% stake
in Suntec and CHC will have to move back to
JW to cut cost. This is such a wanton squandering of charity money.
And we are talking about God’s money. How sad…. Like · 3 · 21 hours
ago · Edited
Patrick Liew @JC they can’t move back to JW like that. The
default for failing to pay rental for Suntec Singapore for fixed
minimum no. of years is the loss of the collateral (JW church).
This is stated in the original letter by Drew and Napier to the
church’s members on the NDA. This is a catch
22 situation which CHC has to circumvent to
avoid the loss of their $48 million asset. Either they stay and
incur even more expenses and servicing of loans or lose their only
asset. If they take the latter route, its probably back to
Singapore Expo….everything start from square 1 Like · 3 · 18 hours
ago · Edited
Jean Chong Hi Patrick. Yes, you are right about the rental
contract but there are X+Y years options in the rental agreement
which I won’t get into details here. Suffice to say that there are
still good people in CHC that are looking out
for the church and they recognize the cash crunch that are getting
worse by the month. All I can tell you is JW is free of any
encumbrance. (Imagine this news headline: Lee Ka Shing’s listed
property vehicle in Singapore forecloses a megachurch in
Singapore!! No sane businessman will allow that to happen.) Expo
Hall 8 was only $3.5m a year but the numerous shiftings a year cost
more than that. When the case broke, KH & gang worried that
there would be uproars if the congregation come to know that 1) The
so-called $310m package only has a 20% stake which cost $43.5m only
plus projected 10 years usage. 2) Rental at Suntec is $15m/year and
shifting components are $15m for first year alone when the dividend
as co-owner was only $2m+/year. To pre-empt these issues, KH &
gang did the followings: A) Buy another 19.2% stake in Suntec at
$54m even when the A&B Fund ($130m+) was depleted already.
Hence the high-interest rate Galaxy loan which was exacerbated with
a markup. Instead of renting Expo 8 at $3.5m/year during
AEI period, rented Expo Hall 1 at $12m+/year
to make $15m/year rental at Suntec seemed more palatable. This was
done when there was a drastic drop in the attendance. KH refused to
cut down the expenses even when the cash crunch is so severe. I
guess he probably did it for selfish reasons. i) Put up the facade
the everything is ok. Along with the claim that he has a good
chance of getting off the hook from the trail, he can get more
private donations for legal/family funds. He is also hoping that
the members will keep the tithes flowing. 2) When he goes to Changi
and the finances crumble, he can comfort himself that CHC could not survive without him…...... The way they are
squandering the funds, moving back to JW seems to be the only
option. They can’t even afford Expo Hall 8 by then. Like · 5 · 16
hours ago · Edited
Josephine Lee Wow, kepala besar-besar. Any other options? 1.
stay put at Suntec and lease out JW? 2. sublet Suntec to
FCBC? 3. recover all the stolen money from
the gang? Like · 2 · 15 hours ago via mobile
Patrick Liew Wow then it seems that X is on the low side (since
Y is the optional)....they have only been there 2 years..its good
to hear that there are no encumberances. Won’t pursue the exact
equation on this, since it is a sensitive issue covered under the
NDA. Thanks JC for all the detailed
information. CHC members, especially those
who are more accounting savvy, should be able to digest the
information and discern for themselves….hopefully those who are
able to translate the figures can tell those who are lost in all
the figures. Like · 2 · 15 hours ago
Lauschke Amy But actually, wasn’t that NDA
supposed to be only valid for 2 years? In my opinion, the
NDA was put in place to facilitate the
original majority stakeholders of Harmony Fund to exit without
exposure. Like · 1 · 14 hours ago
Jean Chong Patrick, hypothetically. If there is an annual markup
of 4-5% for the $50m Galaxy loan, is it criminal? Like · 2 · 14
hours ago via mobile · Edited
Lauschke Amy JC, this interest markup is only part of the whole
CBT charge. By itself, I doubt you can
classify as criminal. Like · 14 hours ago
Grace Tan @ Jean, I think this is a pure intercompany transfer
pricing issue. Is the annual mark up of 4 -5 % structured as an
interest expense or as an annual set up fee? Is UPI a Singapore entity or a foreign entity? If
UPI is a Singapore entity, irregardless of
whether UPI (which acts as a flow thru
conduit entity) passes the loan with an exorbitant mark up or as an
annual set up fee, I do not think the IRAS
will raise any issue as the huge markup will be subject to tax and
yield a higher tax to IRAS. But there might
be possible criminal charges under other laws. Like · 3 · 14 hours
ago · Edited
Jean Chong This is a good illustration on why many CHC members seem to allow the leaders to get away with
outrageous abuses against the church. From the comments, there is
no outrage against the fact that the Church, a charity
organisation, has to pay extra $7-8m in dubious fees to unknown
parties for a transaction that does not make any financial sense.
Like · 4 · 13 hours ago via mobile
Grace Tan Yap – from a tax perspective, as long as the
exorbitant mark ups takes place between 2 Singapore entities, there
is no tax leakage to IRAS since the tax
deduction on the expense claimed by one entity will equalise with
the tax paid on the income by the other entity. Its only when a
huge tax deductible expense flows out of Singapore that the
IRAS will be concerned. But the amounts at
stake even in CHCs case is still unlikely to be material enough to
be under IRAS’ radar. Anyone aware of such a
cross border exorbitant scenario? The fact that a BVI (tax haven country) company was involved really sends
the whistles through the roof from a tax viewpoint.
Patrick Liew Depending on the nature of the services/loans
provided, a mark-up of up to 5% is accepted by IRAS. There is a clear illustration about this indicated
here. http://www.iras.gov.sg/irashome/page04.aspx?id=...
Most of it is beyond my understanding. Perhaps Grace will like to
elucidate. Like · 1 · 11 hours ago
Grace Tan The 5% mark up is for pure cost plus services
companies providing BASIC management services
and is not applicable in an intercompany loan (interest
expense/income). For cross border loans, the appropriate interest
rate needs to be set from a detailed transfer pricing benchmarking
study. But there is no cross border loan involved here right? All
within Singapore, so no point for IRAS to
pursue since no Singapore tax leakage at all from a tax
perspective.
Jean Chong The setup fee is usually levied by a bank just to get
more margin out of the loan. For a loan size of $50m with a tenure
of 3 years, the setup fee is usually 60-80 basis point, that is
$300k-400k in this case, as a once off payment. Like · 2 · 10 hours
ago · Edited
Jean Chong Patrick, have you ever wonder why that no one blows
the whistle on this outrageous markup? Like · 2 · 10 hours ago
Jean Chong Have you ever wondered how they managed to redeemed
the bonds with Xtron and FIRNA? Pastor Aries
claimed that CHC suffered no losses and got
paid with interest. Like · 3 · about an hour ago · Edited
Grace Tan Just realised that 10% interest income in BVI (paid to Galaxy Capital) does not get taxed at all.
What company is UPI? What business activities
is it engaged in? Is it a Singapore Company? Is it in anyway
related to CHC/CHC Commercial entities or
inner circle? Like · 1 · 10 hours ago
Lauschke Amy JC, much as I also want the authorities to dig
further, I have little hope here. From the very outset, I see that
the authorities have been handling him and the case with velvet
gloved hands. Is the govt going to stop at just this CBT charge, thus limiting the exposure of the deep-seated
ongoing abuses? And why? Like · 1 · 2 hours ago
Jean Chong I think I am threading on thin ice here. I think I
will just leave it here. However, I hope that the authority will
get to the bottom of the abuses instead of stopping at the current
CBT charges that do not give any clue to the
massive abuses that has taken place over many years. Like · 1 ·
about an hour ago
Patrick Liew @JC and Amy, please do not be pessimistic about the
proceedings. Much that people like to believe, the PAP MP was probably ask to represent to ‘present the view
that the government is not persecuting any religion’. If there is
no case, why would the AGC and CAD even bother to press the charges in the first place?
COC not acting on the suspensions is not
handling the matter with kid’s gloves. At this point it is
inconsequential also because a sentencing of the individuals,
immediately causes them to be removed as trustees of charity and
grounds for permanent removal. Like · 3 · about an hour ago
Patrick Liew What does one want the authorities to do? The case
had already dragged for so long and to uncover even more evidence
would have caused it to drag even further…...any delays is
complicated by the fact that COC had to move
to protect the assets of the church in the interim. All ‘that is
revealed here further by Confessions posters, I do not believe is
unknown to the authorities but they have to strike a balance what
charges to press. CBT as agents are life
sentences (x3) and each of them have at least 3 of these charges to
disprove in court. Life sentence in Singapore is now truly life
sentence and no possibility of parole application before the 20th
year in imprisonment. It is not easy for the AGC/CAD to press charges for multiple life sentences, as
they have to practise due dilligence before pushing for such
charges. How does this show that the government is handling this
case with velvet gloves? Like · 2 · 48 minutes ago · Edited
Josephine Lee @Jean—Could you re-post the (now deleted) list of
the 6-7 questionable activities / areas for investigation in the
main Confessions page for all of us? I thought they were so
spot-on. Like · 1 · 43 minutes ago via mobile
Grace Tan Agreed with Patrick as the authorities are unable to
take any more harsh measures when the members do not voice out any
discontent/unhappiness – as the Govt might be seen as persecuting
the faith. Already, when you go to CHC FB
page, there are photos of banners from 2 churches reflecting rather
“vague” prayers for CHC leaders. They could
have made it clearer that they were praying for the truth to be
revealed. Such “vague” prayers does seem to support the leadership
in playing the “CHC is being persecuted” story…